ADX Gold Technical Analysis and ADX Signals
Created by J. Welles Wilder
This a momentum technical indicator used to measure the strength of a market trend: it's derived from the DMI - Directional Movement Index which has two lines.
+DI - Positive Directional Movement Index
–DI - Negative Directional Movement Index
ADX is calculated by subtracting these 2 values & applying a smoothing function.
The ADX is not a directional trading indicator but a measure of the strength of the xauusd trend which has a scale of Zero to 100.
Higher the technical indicator reading the stronger the price trend.
A value of below 20 indicates that the xauusd market isn't trending but heading in a range.
A value of above 20 confirms a buy or sell signal and indicates a new trend is emerging.
Values above 30 indicates a strong trending market.
When ADX trading indicator turns down from above 30, it demonstrates that the current xauusd trend is losing momentum.
ADX combined with DMI Indicator
Since the ADX alone is a directionless indicator it's combined with the DMI index to determine the direction of the xauusd.
DMI
ADX & DMI Index
When the ADX is combined with DMI index a trader can determine the direction of the trend & then use the this indicator to determine the momentum of the prevailing xauusd trend direction.
Technical Analysis and How to Generate Signals
Buy Trade Signal
A buy signal gets generated when the +DI is above –DI, & the ADX trading indicator is above 20
The Exit signal gets generated when the technical indicator turns down from above 30.
Buy XAUUSD Signal
Sell XAUUSD Signal
A short signal gets generated when –DI is above +DI, & the ADX indicator is above 20
The Exit signal gets generated when the technical indicator turns down from above 30.
Sell Trade Signal
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